NSF evades oversight negligence

Every day, the federal government wastes huge amounts of taxpayer money. The National Ecological Observatory Network (NEON) is the most expensive civilian research project in U.S. history, costing well over $400 million. It is funded through the National Science Foundation (NSF) and has potential for the useful collection of scientific data.  But without strong oversight by the NSF, the project has become a black hole of mismanagement and wasted taxpayer money.

NEON was designed to be a national network for the collection and analysis of decades of local ecological data.  In 2011, NSF awarded project construction to NEON, Inc., a newly created non-profit corporation.  However, in awarding the $433 million contract, NSF ignored an independent audit which warned that more than $150 million of proposed construction costs were questionable or unsubstantiated.

{mosads}This was the first of a series of troubling errors that culminated a few months ago when NEON management informed NSF that the project was 18 months behind schedule and at least $80 million over budget.  

How did this happen?  Although the project received extra scrutiny from Congress and the NSF’s Inspector General, NSF oversight of the project was inadequate, and NEON’s management took advantage of the government’s incompetency.  Several highly critical financial reviews, two project audits, a courageous federal whistleblower, and three House science committee oversight hearings warned NSF and NEON of big problems.  But NSF allowed NEON to conduct business as usual for three years — until it was too late.

While the taxpayers won’t be saddled with extra costs, they will inevitably lose value on their investment.  In this case, NSF has committed to do whatever is necessary to keep the project within its original $433.8 million budget.  However, the bulk of the necessary cost cutting and scaling back will ultimately reduce NEON’s value as a scientific resource.  NSF is also insisting that NEON management cut overhead expenses by about $13 million – which begs for an explanation of why NEON’s overhead is so bloated to begin with.    

Even with the drastic measures taken thus far, the project isn’t out of the woods.  NEON management has raised its estimate of the overrun three times already, but NSF has been unable to verify costs due to the abysmal status of NEON’s financial records.  No one will be surprised if the final cost overrun climbs to $100 million.  If it does, the project’s scientific capabilities will be further reduced.

From the financial information that can be deciphered thus far, an ugly picture emerges of NSF abdicating its oversight responsibilities and of NEON’s senior management treating taxpayer dollars as a slush fund.  While the project fell 18 months behind schedule and $80+ million over budget, NEON management spent lavishly on parties, luxurious office space, foreign travel, entertainment, and other “unallowable” items.  For instance:

• NEON paid a total of $500,000 for office space it vacated when it leased larger, better appointed offices.
• NEON has spent more than $500,000 for Washington, D.C.-based lobbyists — in spite of a federal law that prohibits spending taxpayer dollars for lobbying.
• NEON’s CEO, who was fired after the $80 million cost overrun was confirmed, received a $300,000+ salary, plus generous fringe benefits and thousands of dollars in foreign travel and other perks.  Other senior NEON executives were paid more than $200,000 per year, plus generous benefits.
• NEON’s senior managers apparently liked to throw parties – with other people’s money.  Taxpayers footed the $25,000 bill for NEON’s 2014 holiday party, about $150/attendee – and additional tens of thousands of tax dollars were consumed during “morale-building” staff happy hours, picnics, and other social gatherings.

Having looked the other way for so long, NSF is now very busy with salvaging NEON as a scientific resource and cleaning up a huge financial mess.  Maybe more concerning is the lasting damage done to NSF’s reputation for being able to handle such large cooperative agreements.  

Firing NEON, Inc. as the project manager seems like an obvious step for NSF to take.  Internal changes at NSF should also be considered; those responsible for overseeing the project should be held accountable.  

The science committee and the full House of Representatives have already approved legislation that bolsters the NSF Inspector General as an independent financial and administrative watchdog and requires NSF to reform its budgeting, financial controls, and oversight of its major research facilities.

But the most important thing for our committee and other Congressional committees is to continue to ask hard questions and demand accurate answers from the government agencies and officials who control nearly $4 trillion in annual federal spending.  Congressional oversight isn’t glamorous work.  Federal agencies and the administration complain bitterly about it and often refuse to cooperate.  But the NEON debacle demonstrates that we cannot sit back and let taxpayer money be wasted in such a way.  Congress has an obligation to conduct robust oversight, and as members of Congress, we have every intention of using our authority to shed light on this type of waste, fraud, and abuse.

Loudermilk has represented Georgia’s 11^th Congressional District since 2015. He is chairman of the Science, Space, and Technology Committee’s Subcommittee on Oversight, and also sits on the Homeland Security Committee.  Johnson has represented Ohio’s 6^th Congressional District since 2011. He sits on the Energy and Commerce and the Science, Space, and Technology committees.